Twitter’s Ban on Crypto Ads Won’t Have Much of an Impact on the Market
On Monday, Twitter announced it would follow Google and Facebook’s lead in banning cryptocurrency advertising. The ban, which has been in the works for at least a week, triggered a sharp decline in the value of bitcoin and other cryptocurrencies. However, a closer evaluation of industry statistics shows Twitter’s crackdown will have no bearing on the market.
Twitter Caves In to Crypto FUD
Beginning Tuesday, Twitter will ban cryptocurrency ads and other material that promote “financial products and services frequently associated with misleading or deceptive promotional practices.” The ban will apply to cryptocurrencies, initial coin offerings (ICOs) and possibly exchanges as well.
“We are committed to ensuring the safety of the Twitter community. As such, we have added a new policy for Twitter Ads relating to cryptocurrency,” a Twitter spokesperson told CNBC. “Under this new policy, the advertisement of initial coin offerings and token sales will be prohibited globally.”
While there’s little doubt that crypto scammers are using social media to engineer fraudulent campaigns, a blanket ban on the industry weeds out legitimate businesses. Rather than pursue a proactive approach to managing the problem, Twitter is acting on the fears of vocal regulators and mainstream media, neither of which fully understand cryptocurrency.
Or, perhaps, cryptos aren’t generating enough business on Twitter. If industry statistics are to believed, this is likely the case. So, while it may be unfortunate that Twitter is banning the entire industry from advertising on its platform, the clampdown will have no impact on the market once investors get over today’s headlines.
Crypto Exchanges Don’t Need Paid Search
A recent analysis of referral data by Similar Web found that paid search accounts for less than 1% of overall traffic to digital currency exchanges. Although Twitter was omitted from the research, the study found that platforms like Google and Facebook had little impact on the crypto market.
Referring to Facebook and Google’s ban on cryptos, study author Liron Hakim Bobrov issued the following statement:
“Despite this tightening of restrictions from the two biggest advertising platforms, there is little chance that this will have a major impact on the flow of traffic to the top cryptocurrency exchange sites, given that until now paid search was responsible for less than 1% of their traffic.”
The study further concluded that CoinMarketCap accounts for 8.5% of all U.S. desktop traffic to the world’s top crypto exchanges.
Jack Dorsey’s Contradiction?
Twitter’s chief executive Jack Dorsey is extremely bullish on cryptocurrency, which makes his company’s decision to ban crypto ads even more curious. In a recent interview with the U.K.’s Sunday Times, Dorsey predicted that bitcoin will eventually be the single global reserve currency and argued that its slow and costly transactions will eventually “go away” as more people migrate to the blockchain.
While it could be argued that Dorsey’s love affair with bitcoin doesn’t extend to altcoins, the blanket ban makes no distinction between BTC and the broader market. Instead, it bars any crypto-related company other than publicly-listed firms from displaying ads on the platform.
Despite the ban, Twitter remains a hotbed for crypto market speculation and discussion. As Lucinda Shen of Fortune recently pointed out, the new clampdown will have no impact on the platform’s fake news problem (which is apparently bigger in the realm of cryptocurrency).
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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